Money and the new Economy part 3 May 27, 2009
Posted by spacemom in : Life...otherwise, Current Affairs , trackbackMore on money:
Every year, Jay sets up a rough budget. The income is basically our biweekly take home paycheck X2 X12. This shorts us 2 paychecks. Jay does this on purpose and assumes we just put this money into savings. Then we mark out what we spend every month and/or we take the yearly payout (for example, violin lessons that I pay 3x a year) and divide by 12 to get a rough monthly payout. The difference is our "savings".
We automatically pay into our 403(b) accounts (those are like 401(k) accounts, but for educational professionals), so that money is never counted in our budget. It isn’t counted on the income or outgoing. Vapor money. That’s for retirement.
We have two "types" of accounts with our financial adviser. A "savings" account and a "retirement" account. The money we place in the retirement accounts, we ignore. That money is not to be touched unless we absolutely have to. So far, we haven’t needed to. The "savings" accounts are used for the big items: new furnace in our old house, down payment for the car, the kitchen remodel, the electrical work we need to do this week.
I am always worried about having savings. When I was in college, I lived less than paycheck to paycheck. It was scary and that is knowing that I could always ask family to help. Now I see that more and more people are living this way. Not being able to save because of the costs of life. Then something happens. Even something simple as a water heater failing. That is enough to get someone behind.
I see that my sister is struggling. She always has. Can one ever escape this cycle? I think the new economy won’t allow people to escape this. We are seeing more and more people losing their homes, not because they were greedy, but a health issue. That’s usually the "something". Health insurance covers somethings, but not all.
The new economy scares me. Not really for me, but for everyone. Who can afford their home? Who has lost a job? What is going to happen for these people?
Comments»
I’ve been thinking about this whole idea of a mortgage that lasts well beyond a decade or two, and how anybody in their right mind can predict that they will undoubtedly be able to afford those monthly payments for that long a time. In the old days I suppose a job was pretty much for life, but that sure isn’t true anymore. My wish for the New Economy is that there would be no such thing as personal credit. You save up for what you want or you go without. Of course, prices for cars and houses would have to plummet, but wouldn’t we all be better off not carrying debt? Anyways, I’d like to congratulate you on your financial wisdom and only wish I’d figured it out a lot sooner than I did. But hey, better late than never right?